How much does per-student funding vary between students in South Dakota, its surrounding states and the nation?

On May 21, 2013, the US Census Bureau released the 2011 Public Education Finance Report. Data from Table 11 of the report allows a comparison of per-student funding sources between states. Analysis of the last ten years data shows South Dakota has consistently lagged both the surrounding state1 average and the national average in per-student funding for education.

According to the South Dakota Department of Education, “The amount of state aid provided to local school districts for general K-12 education is based on an equitable formula that starts with the same amount of funding per student. Small schools receive more money per student. The total amount of per-student funding for a school district is paid for by a combination of money raised by the school district through local property taxes and money raised by the state through statewide taxes. School districts also have other sources of revenue for general education beyond state aid.” Source: SD Dept of Education State Aid Issue Brief .

Why does South Dakota’s “equitable formula” leave average per-student funding for South Dakota students consistently below national and surrounding state averages? SD Budget and Policy Project is examining the data relevant to this question2 in a series of research publications. This report – the first – examines sources of per-student funding.

The Public Education Finance Report (page vi) defines revenues sources: “Revenue from federal sources” includes monies passed through state governments, as well as federal outlays directly received. “State source revenue” consists only of amounts originating from state governments. “Revenue from local sources” is comprised of revenue raised locally—including taxes, charges, and miscellaneous revenues.

Local Funding Sources

SD Budget & Policy Project analysis of the ten year data reveals average per-student funding from local sources for South Dakota students has been 3-6% lower than the national average. Over the period South Dakota’s per-student averages from local source funding fluctuated between 8% more and 6% less than the surrounding state average. As of 2011, South Dakota’s average per-student funding from local sources was 3% lower than the national average and 5% lower than the surrounding state average.

Federal Funding Sources

SD Budget & Policy Project analysis of the last 10 years data reveal average federal per-student fundings for South Dakota students has consistently been higher than the national or surrounding state per-student averages. As of 2011, South Dakota’s federal average per student funding was 37% higher than the national average federal per-student funding and 29% higher than the surrounding state average.

State Funding Sources

It is in state source per-student funding that South Dakota most significantly lags the national and surrounding states averages. As of 2011, South Dakota’s state source average per-student funding was 46% lower than the national average federal per-student funding and 53% lower than the surrounding state average. Analysis of the 10 year trend reveals South Dakota’s deficit in state-source per-student funding has been steadily worsening relative to national averages (from negative 38% to negative 46%) and surrounding state averages (from negative 33% to negative 53%).

In the forthcoming segments of this research project, SD Budget & Policy Project will examine per-student revenue variations between South Dakota school districts, including district’s revenue sources (local/state/federal), district size, geographic sparcity, and “other funds” passed outside the state aid funding formula.

1 Surrounding states are all adjacent states: North Dakota, Montana, Wyoming, Nebraska, Iowa and Minnesota.